How the housing market can just “crash”? I (think I) get how the prices can go up, but what makes them go down suddenly?
In: 1
People stop being able to afford the current price or can’t get a loan for the current mortgage interest rates at a time that people are still needing to sell their house. If buyers dry up, the price has to drop until buyers return.
For example, if we have a recession at a time of increased interest rates, some people will HAVE TO sell because they lost their job and can’t afford their mortgage payments but no one can buy because current mortgage interest rates have doubled. So, a $500,000 house bought three years ago costs $2000 per month now might sell for $400,000 but actually cost $2400 per month due to increased interest rates. Good luck with that!
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